The Sydney Morning Herlad is reporting this morning that filming has begun on Baz Luhrmann's Australia, which stars Nicole Kidman and Hugh Jackman.

Two of Hollywood's biggest stars came to town but even the mayor didn't know they were secretly filming in his neighbourhood.

Camelot, a grand house at Camden on Sydney's outskirts, was the secret location for filming during the week of Baz Luhrmann's Australia, featuring Australian superstars Nicole Kidman and Hugh Jackman.

A source close to the set revealed that Kidman and Jackman were in Camden for interior and exterior scenes on Wednesday and Thursday. But filming was so secret that Camden Mayor Chris Patterson, who lives four doors away from the house, didn't even know the stars were in town.

Mr Patterson said he had no idea Kidman and Jackman had been just down the road. He said filming was not subject to council approval.

But it's understood the house and property were used for early scenes in Luhrmann's movie about an English aristocrat who inherits a property in the Northern Territory during World War II.